Strategic Management

1. Presented by
Amit Pramanik
Rahul Saini
Samrat Kundu
Sruthi Nair
Ujjawal Kishore
Gerald B. Allan
Boston Consulting Group,
Boston, Massachusetts

4. PRODUCT ROLE
ROLE
Cash flow
Cost
potential
CASH
FLOW
COST
POTENTIAL
GROWTH
FUND
SUPPLY
ABORT

5. Market Share Market
Growth Rate

6. Dogs
8
7
3
?
Question marks
?
2
1
Cash cows
6
Stars
5
4
High
Low
High Low

7. Leader expanding industry
Generates large profits
Requires substantial investments
to sustain growth
Farthest down on experience
curve relative to competition
Increase sales – e.g. new markets,
new channels of distribution
Increase market share

8. Low market share in expanding
industry
Needs substantial cash to improve
its position
Slow progress on experience curve
Increase sales (limit to niche or
increase market share (limit to
niche)
Leave market

9. Leader in mature or declining
industry
Can generate funds for other SBUs
Maintain market share e.g. ensure
quality, build customer loyalty,
develop substitute brands
Maximize Cash Flow e.g. increase
usage rate, rate of replacement,
modify expense structure, raise
prices

10. Low market share in a mature or
declining industry
Slow progress on experience
curve
Cost disadvantages and few
growth opportunities
Concentrate on niches requiring
limited effort

12. • Star – Leader in Expanding Industry
– BUILD - Continue to increase market share – if necessary at
expense of short-term earnings
• Problem Child – Low market share in Expanding
Industry
– HARVEST if weak, BUILD if strong.
– Assess chances of dominating segment. If good, go after share.
If bad, redefine business or withdraw.

13. • Cash Cow – Leader in mature or declining
industry
– HOLD - Maintain share and cost leadership until further
investment becomes marginal
– Maximize cash flow
• Dogs – Low market share in a mature or
declining industry
– DIVEST Plan an orderly withdrawal so as to maximize cash
flow or concentrate on niches that require limited effort

15. 1 2
Experience
curve
Product life
cycle

16. Issue 1 Issue 2 Issue 3
Neglects effect
of synergy b/w
business unit
Market growth
is not
necessarily
related to cash
usage.
Market share
is not
only success
factor
Issue 4
Multiple
factors lead
to profitability
& Cash is not
the only
factor in
evaluating a
portfolio

17. Issue 5 Issue 6 Issue 7
Low market
share can also
be profitable
Dogs can earn
more than
cash cows
Measurement
problems

18. Internal
Balance Trends
Competitive
Evaluation
Products are appropriately distributed
among the forth quadrants
Projection of Trends for a product in the
forth coming five year period
Product Portfolio charts for major
competitors must be developed

19. Industry
Position
Financial
Balance
It can be obtained by plotting market
growth against the company’s own
product growth
It is based on detailed cash flow
calculation